Justia Banking Opinion Summaries

The debtors bought their house in 1994 and, after a Chapter 7 discharge in 2004, refinanced. The loan closed in California, although the house was in Michigan, and the debtors signed a note, but did not sign a mortgage. The loan was funded and assigned to appellant. A few months later, they filed a Chapter 13 petition and the lender produced a recorded mortgage, ostensibly signed by the debtors in Michigan. The Bankruptcy Court found that the signatures were forged. On remand from the district court, it imposed an equitable mortgage on the house. The district court reversed, finding the mortgage void ab initio. The Sixth Circuit affirmed. The district court properly considered the issue, held that the mortgage was void, and declined to impose an equitable mortgage because the assignee is subject to the defense of unclean hands, as was the original lender.

Defendant, an immigrant, cleaned houses. She formed a cleaning service in 1992. Defendant would deposit customers' checks in the business checking account, keep some money as a fee, and withdraw the remaining amount to pay individual cleaners. The bank informed her of the requirement (31 C.F.R. 103.22(b)(1)) that it document and report transactions involving withdrawals of cash greater than $10,000. After being informed of the requirement, defendant would often withdraw more than $10,000 over the course of two days, but less than 24 hours; she withdrew amounts over $9,000 and less than $10,000 on 244 occasions in about six years. She was convicted of 23 counts of structuring transactions to avoid bank reporting, 31 U.S.C. 5324(a)(3). The court gave an "ostrich" instruction, concerning defendant's knowledge. The jury returned a special verdict subjecting $279,500 to forfeiture; the court imposed a sentence of three years of probation as well as an additional judgment of $4,800. The Seventh Circuit affirmed, finding no constitutional violation in weighing the forfeiture against the severity of the crime. Any error in giving the ostrich instruction was harmless.

Plaintiffs filed a complaint alleging, among other things, a violation of the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. The district court subsequently granted defendant's Rule 12(b)(6) motion and plaintiffs timely appealed. The court held that plaintiffs clearly alleged in their complaint that they were never given a Notice of Right to Cancel that complied with TILA. Consequently, the complaint was not subject to dismissal under Rule 12(b)(6) and therefore, the court reversed and remanded.

Petitioner Countrywide Home Loans, Inc. appealed an award by the Commissioner of the State Banking Department in favor of Respondent Rachel Nicholson based on claims under the Consumer Protection Act. The issue stemmed from Respondent contacting Countrywide in 2005 in order to purchase a house. She spoke with two Countrywide agents who promised that they would "investigate and present her with the best [financing] program." At the hearing before the Commissioner, Respondent testified the agents orally approved her for a 30-year fixed rate mortgage loan at 6% interest. Thereafter, Respondent spoke with agents on a weekly basis regarding the property purchase and loan. The agents did not raise any problems with the loan application until two days before the scheduled closing date. On that day, despite the fact that there were no changes in Respondent's employment status or credit since the application had been filed, the agents informed her that Countrywide would not be able to grant a fixed interest loan for the amount she needed. They informed her that to purchase the home, she would need to apply for two different loans. On the scheduled closing date, as instructed by the agents, Respondent applied for two new loans at higher rates of interest but for shorter durations. After multiple hearings, the Commissioner ultimately entered an order ruling that Countrywide had committed "an unfair or deceptive practice" under state law, and ordered that Countrywide reimburse Respondent for all monies paid prior to, at and after closing, as well as discharge the first mortgage and void the second. Furthermore, Countrywide was ordered to quitclaim the property to Respondent. Finding that the Commissioner should not have granted a hearing on the merits of Respondent's claims, the Supreme Court vacated the award entered in her favor.

Plaintiff alleged that Chase willfully and maliciously provided false information about his finances to Equifax, a consumer credit reporting agency. Chase removed the suit to federal court and moved for dismissal under Rule 12(b)(6), arguing that plaintiff's claims were preempted by the Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681t(b)(1)(F). Plaintiff appealed from the district court's dismissal of his state common law tort claims. The court affirmed the judgment of the district court, holding that the FCRA preempted plaintiff's state law claims against Chase.

Arrow Financial Services filed a complaint against Sarah Guiliani alleging breach of contract and unjust enrichment. Arrow then filed a motion for summary judgment seeking to establish that Arrow owned a credit card account registered to Guiliani and that Guiliani owed an unpaid balance of $5044 on the account. In support of its motion, Arrow asserted in an affidavit that it was the assignee of Guiliani's credit card account with Washington Mutural. The district court granted Arrow's motion and awarded Arrow $3493, plus interest and court costs. The Supreme Court vacated the district court's judgment, holding that the district court incorrectly granted summary judgment in favor of Arrow because disputes remained as to material facts regarding the balance due on the account and its assignment to Arrow.

Appellant, a former shareholder in Wachovia, sought to recover personally for the decline in value of his shares of Wachovia stock during the recent financial crisis. The district court dismissed the suit, concluding that appellant's complaint stated a claim derivative of injury to the corporation and that he was therefore barred from bringing a direct or individual cause of action against defendants. The court held that because appellant's varied attempts to recast his derivative claim as individual were unavailing, the judgment of the district court was affirmed.

The United States appealed the district court's dismissal of a superseding indictment because it did not state a crime against defendant for knowingly and willfully making false statements to a financial institution insured by the FDIC and knowingly making false statements for the purpose of influencing the action of a bank insured by the FDIC. Defendant made the allegedly false statements on loan applications to refinance his residence where he failed to list an illegal campaign loan under "outstanding debts." The court agreed with the district court's conclusion that defendant's statements were literally true because the illegal loan was an absolute nullity and consequently was not a debt that ever existed.

Defendant appealed the order of the bankruptcy court granting a motion for summary judgment filed by the trustee of debtor's bankruptcy estate. The trustee sought, and the bankruptcy court entered, an order determining that defendant did not have a security interest in certain of debtor's personal property. The court held that the record supported the bankruptcy court's determination that Wells Fargo had the authority to terminate defendant's successor in interest's (NSB) financing statements. The court also affirmed on the basis that termination of the financing statements was unnecessary because NSB's security interest in the property was extinguished when Loan No. 7 was paid in full in September 2007.

Plaintiffs paid off their home mortgage early and were charged a $30 "payoff statement fee" and a $14 "recording fee" in connection with the prepayment. They challenged the fees as violations of the mortgage contract, of state laws, and of the federal Real Estate Settlement Procedures Act, 12 U.S.C. 2601. The district court dismissed the suit as preempted by the federal Home Owners’ Loan Act, 12 U.S.C. 1461, and for failure to state a claim under RESPA. The Sixth Circuit held that the other claims were properly dismissed, but remanded a breach of contract claim. A Michigan Usury Act claim was preempted by HOLA; plaintiffs failed to state a claim under the deed recording statute, the state consumer protection law, or RESPA, which does not apply to charges imposed after the settlement. The court rejected a claim by the FDIC, appointed as receiver for the defendant-lender, that the court had been deprived of jurisdiction by the Financial Institution Reform, Recovery, and Enforcement Act, 12 U.S.C. 1281(d).